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Groups want proposed loan for Oakland coal shipping port declared illegal

SALT LAKE CITY — A coalition of environmental groups is asking Utah Attorney General Sean Reyes to declare a pending $53 million loan for an Oakland export shipping port illegal, asserting that mineral lease monies can't be spent out of state for a private purpose.

The Center for Biological Diversity, the Sierra Club, the Grand Canyon Trust and Earthjustice sent a letter Monday to Reyes asking him to nix the deal because they say the would-be loan violates state and federal laws.

"Funding a private coal export terminal in California with Utah’s federal mineral leasing monies, to enable greater coal production in Utah, violates Congress’ intent to alleviate the impacts of existing federal mineral development with those funds," the letter states. "The plain language of the Mineral Leasing Act, the act’s legislative history, and the Utah attorney general’s own interpretation of the act all confirm that funding private economic development is a misuse of federal mineral leasing monies."

The letter adds that the purpose of the state law governing the Community Impact Board expenditure of monies requires that money generated in Utah stay in Utah.

Four counties — Sevier, Carbon, Emery and Sanpete — sought a $53 million loan from the state Community Impact Board to buy interest in a new export terminal planned for Oakland at the site of a former Army base.

The counties want access to the terminal to provide a shipping destination for Utah coal, hay, potash, salt and other goods. Under the pending arrangement, the counties would get access to 49 percent of the space in the dry bulk facility, which has the capacity of 9 million metric tons.

Members of the Community Impact Board — which provides low interest loans or grants to Utah cities, counties or governmental districts impacted by mineral development — approved the loan in April with the provision it get a legal "all clear" from the Utah Attorney General's Office.

"The money outlined for this project was conditioned upon a legal analysis being conducted by the Utah Attorney General's Office," said Nic Dunn, a spokesman for the Utah Department of Workforce Services, which offers administrative support to the board. "The board members are just sitting tight waiting for that analysis to be completed."

Utah has a long history of exporting some of its in-state coal to foreign markets, but the counties are looking to shore up dependable access to seaside shipping for overseas markets, particularly Asian recipients, as U.S. environmental regulations bring increasing pressure on domestic consumption.

Coal makes up two thirds of China's energy demands, according to the Energy Information Administration, and with 45 new coal-fired power plants in the planning or construction phase, the Philippines is expected to double its coal-fired capacity in the next five years.

With Utah coal of a cleaner burning variety — it has low sulfur and high heat content according to the Utah Geological Survey — the state's coal-producing counties want to be able to cash in on foreign demand.

Opponents want to block that.

"This possible CIB loan smells," said Dick Cumiskey, president of the Sevier Citizens for Clean Air & Water. "We firmly believe this is an illegal loan and that its use for a private party outside of Utah is incomprehensible. We welcome the (attorney general's) intervention."

Utah, 14th in the nation for coal production, would likely send about 5 million tons of its coal to Oakland via covered rail cars.

The Oakland terminal controversy brewing since this spring is one more legal battle being launched in the groups' attack on coal.

Earlier this year, the Sierra Club and others challenged federal approval of a lease that would open up 57 million tons of recoverable coal in central Utah for Kentucky-based Bowie Resources — which would be the primary coal supplier for the Oakland shipping port.

The Sierra Club and Earthjustice are also suing Oakland City, asking for an additional environmental review of the Oakland terminal that specifically examines the impacts of coal being shipped to the city.

While the groups maintain that California and Utah residents will be subjected to the ills of coal dust from the transport of the material, proponents say the rail cars will be covered.

In the West, Utah is not the only state looking to secure long-term access to export terminals on the Pacific Coast. Wyoming passed a law in March authorizing up to $1 billion to be spent for out-of-state projects, including a coal export terminal. Lawmakers from Wyoming, Montana and Washington toured an export terminal earlier this month in Washington.


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